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Why Doesn't the Government Fix Sporting Events?

This blog has clever readers. One of them, Corey Forbes, writes in to say:

We know that point shaving, game throwing, match fixing, and referee scandals have existed in professional and college sports since as long ago as the 1919 Chicago White Sox. Knowing this, why doesn’t the U.S. Government just fix a sporting event(s) to pay off its debts … or are they doing this already?

I love the “or are they doing this already?”

Anyway: why not indeed (other than the potential p.r. and financial disasters)?

Clinton Barber

Because if we ever caught them doing something that heinous, we'd never be able to trust them again.

Reader

April 18, 2013 @ 1:59pm

Funny. (assuming you're using sarcasm)

Seminymous Coward

April 18, 2013 @ 1:56pm

The US government debt is ~$16.4 trillion. The entire US annual GDP is ~$15.7 trillion. A single F-22 (~$150 million) costs more than the total bet on any Super Bowl (~$95 million, admittedly licit only).

Jovanov

April 18, 2013 @ 2:02pm

Mr.Dubner please look into Guiseley a team in third division in England. No Economics is required to figure out the scam happening there (i have been making huge profits due to this) .
The Governemnt may not be involved but surely the owners are.

rationalrevolution

April 18, 2013 @ 2:05pm

This doesn't sound clever, it sounds idiotic. First of all, how much sport fixing would be required to "pay off" over $14 trillion in debt. Doesn't seem even remotely possible to generate that kind of revenue from "sports fixing". Another issue, of course, is whether or not "paying off" debt is even a good idea or a desired activity among the worlds financial elite (who pretty much are the ones driving the system in the first place).

First let's consider that about 1/3 of the US debt is owed to domestic programs, like Social Security and other types of pension and retirement systems. This isn't debt that you can just "pay off", this debt has to be paid down as needed. Granted, over the next 15 years it will be needed.

Then there is debt held by private investors, both foreign and domestic. Again, you can't simply pay this debt off. This debt has a schedule. I guess that the Fed could buy back that debt, but in order to do so it would have to pay more than the debt it worth. Seems quite an unusual approach to take. But really, the truth is that private investors WANT to buy US debt. There is a lot of market demand for government debt in truth, an this is one of the reasons that we have so much debt, because the rich and the powerful want the US government to be in debt for multiple reasons, it benefits them in several ways.

I have no doubt that if the richest and most powerful people in america REALLY wanted us to eliminate federal debt that we would do so, but the truth is that they don't. They benefit in 3 ways from debt issuance. #1 the use of credit reduces current tax rates, #2 they know that government spending helps the economy in general, and in many cases government spending directly aids them or their assets (government contracts with private businesses, bailouts, government backed loans, etc.) #3 the government has to issue debt if they are going to have t-bills to put money into. Now you may say that currently the price of t-bills is so low that they aren't even worth investing in, but if you are a billionaire with more money than you know what to do with and you want to keep some of it in something viewed as very safe, then you will have a reason to buy t-bills....

So really, why doesn't the government pay off the debt? Because actually paying off the debt is a lot harder than simply raising revenue and paying a bill, and there are a lot of very rich and powerful people who have a vested interesting in the government maintaining its debt load...

What the treasury markets are basically telling us is that creditors are not calling on the US government to pay back its debts, and thus, that's the reason that we aren't doing so...

Read more...

Robert Foltman

April 18, 2013 @ 2:06pm

Maybe other reasons why are: A. They would be breaking their own federal law prohibiting sports wagering and B. There isn't a big enough market that could handle their bets.

A far better idea would be to legalize sports wagering and tax it, which is what most people want anyway.

Ken

April 18, 2013 @ 2:08pm

What sporting event are they going to fix to net them $16t? There isn't that big of a difference between the Cowboys in the Super Bowl and Jaguars.

Perhaps instead of fixing the Super Bowl, the should fix the budget!

Mike B

April 18, 2013 @ 2:11pm

Better and less disruptive sources of Government revenue would include a sponsorship programme where Taxpayers can sponsor what their taxes pay for like tanks or police cars. Basically works like a PBS pledge drive where you pay a certain amount you get your name on something. Paying extra gets you more perks. Government can sell naming rights for buildings, a spot on currency or stamps, etc. Also with its intelligence apparatus it can make insider trades based on upcoming world events and structure the trades to impact non-citizens.

Michele

April 18, 2013 @ 2:16pm

Who trusts the government?

stijn

April 18, 2013 @ 2:18pm

hello,

cool question.
First i think it would be equal to an extra tax on sportbetting, that could be acceptable.
But it is also a hidden fraud system that the government creates. The trust in the government institution would suffer alot.

Ed

April 18, 2013 @ 2:21pm

Because you wouldn't be removing the debt you would be shifting it on to a corporation who would then go bankrupt - along with its credit providers..................who would then require government money to be bailed out. Vicious cycle.

Kyle

April 18, 2013 @ 2:22pm

Using the assumption an estimated $380 billion is bet per year in the US, Vegas sets lines by plus or minus having equal sides of money on each half of the bet, so they don't lose. With half of the people will be betting on the same side, allowing them to be able to win $190 billion per year (this doesn't consider the lines moving, which they would if you brought double the money on one side). This assumes every single bet they get every player to cooperate and they wouldn't be required to pay them anything, which would also cut into the government's winnings.

Even in this scenario, with $16.8 trillion in debt, it would take 88 years of fixing every sports event to pay off the debt. This is the best case scenario assuming every fixed game the athlete's cooperate. While I think it is easier to simply spend less, at the rate the politicians are going, maybe this is a better method.

Josh

April 18, 2013 @ 2:26pm

Because it wouldn't work--at the moment that it came out (and smart economists such as yourselves would figure it out right quick), the volume of people willing to accept a wager against the government would plummet, reducing the potential revenue.

Mike D

April 18, 2013 @ 2:27pm

Aren't we largely overestimating the scale of gambling here? The most money bet on any one game is the Super Bowl, where $93M was legally wagered in Las Vegas this year. The US Debt currently stands at $17 trillion. That's about the equivalent of a penny compared to $1.6M

If the US were to fix the Super Bowl, it'd be tough to find someone to take the other side of a bet large enough to matter. Plus, it'd sure look like something was up.

Andrew

April 18, 2013 @ 2:29pm

Fix them how? Even if the government paid somebody to throw a match, the government is too big for everybody not to know about it already so nobody would take their bet. They'd have an easier time investing in a stock and doing something to affect its price.